The propriety of the disposition that excluded the retirement bonus paid without the provision on payment of benefits from deductible expenses

In light of the fact that the issue amount was paid after the termination of the employment contract and the fact that it is difficult to specify the amount even if the price for the portion of the work performed according to the agreement is included, it is reasonable to view the issue amount as retirement compensation.

Article 19 (Scope of Losses)

Article 43 (Non-Inclusion of Bonuses in Deductible Expenses)

1. The plaintiff's claim is dismissed.

2. The costs of lawsuit shall be borne by the Plaintiff.

Purport of Claim

The disposition of imposition of KRW 109,096,480, which the Defendant rendered to the Plaintiff on January 2, 2007, shall be revoked.

1. Details of the disposition;

A. The plaintiff is a corporation established for the purpose of "food manufacturing business for the healthy life" as a subsidiary of ○○○○○○, and △△△ has been working for the company on November 15, 1983 and has overall control over the manufacturing and sales of organic agricultural coagus by taking office as the representative director of the plaintiff on March 1, 2003.

B. Meanwhile, around October 2004, 000 ○○○ Broadcasting reported by a civic organization reported that “the Plaintiff’s juice sap was manufactured with an agrochemical cultivated by using an agrochemical rather than with an organic agricultural vegetable vegetable vegetable vegetable vegetable vegetable vegetable vegetable vegetable vegetable vegetable vegetable vegetable vegetable vegetable vegetable vegetable vegetable vegetable.”

다. 이에 따라 원고는 2004. 12. 13. △△을 대표이사직에서 사임시키고, ◯◯에게 위 보도에 따른 사태 수습을 맡기기로 하면서 같은 달 28. 아래와 같은 내용의 합의서(이하, '이 사건 합의서'라고 한다)를 작성하였다.

1. Scope of business performance: Countermeasures against the relevant large media media in relation to organic sapa, management of the place of origin of extract, and support for the management of franchise stores;

2. Period of execution: One year (from January 1, 2005 to December 31, 2005); and

3. Provision of incentives;

(a) Assessment: The company shall evaluate and pay it through an agreement with △△△;

(b) Amount paid: The annual salary, other welfare systems not supported, and retirement bonus shall be the amount determined by the board of directors.

(c) Time of payment: Payment at the end of 2005 on the expiration of this Agreement.

(d) Handling of income: This income shall be paid as earned income; and

D. Upon the resolution of the board of directors on December 23, 2005, the Plaintiff paid 315,33,380 won as a special bonus to △△△△△ on the 31st of the same month (hereinafter “the dispute amount”).

E. On January 10, 2006, the Plaintiff considered the above key amount as earned income, and withheld and paid income tax to the Defendant, and included the key amount paid to △△△ in deductible expenses, and reported the tax base and tax amount of corporate tax for the business year 2005.

F. As a result of the tax investigation of the Plaintiff, the Defendant considered the key amount of the issue as “amount equivalent to the retirement bonus for an executive officer paid without payment provision out of the amount appropriated for benefits,” and excluded the amount from deductible expenses. On January 2, 2007, the Defendant added the amount of KRW 26,471,692 to the gross income and imposed corporate tax of KRW 109,096,480 for the Plaintiff in 2005 (hereinafter “instant disposition”).

G. The Plaintiff appealed and filed a request for examination with the Commissioner of the National Tax Service on March 7, 2007. However, he was dismissed on May 30, 2007, and the Plaintiff filed the instant lawsuit on September 4 of the same year.

[Reasons for Recognition] Facts without dispute, Gap 1, 2, 3, 4, 20 evidence, Eul 1, 7, 8, and 9 evidence

2. The assertion and judgment

A. The plaintiff's assertion

The amount of issues paid to △△△ shall be included in the deductible expenses, as it is normal and legitimate benefits, which are paid in accordance with the standards for special bonus payment for executive officers by determining the limit of the executive's remuneration by a resolution of the general meeting of shareholders in accordance with the procedures

B. Relevant statutes

It is as shown in the attached Form.

C. Determination

1) According to Articles 19(1) and (3), and 20 subparag. 1 of the Corporate Tax Act, and Articles 20(1)4, 43(2), and 44(3)1 of the Enforcement Decree of the Corporate Tax Act, disposal of surplus shall not be included in deductible expenses in principle as it does not belong to deductible expenses in its concept. However, where a domestic corporation agrees in writing to the employee's performance calculation index and its goals, method of measuring and allocating performance results, etc., it shall not be included in deductible expenses. However, it shall be limited to the amount paid by the corporation to the employee in accordance with the standards for payment of wages determined in advance by the articles of incorporation, the general meeting of shareholders, the general meeting of employees, or the board of directors among bonuses paid by the corporation to the officer, and the amount exceeding the amount of retirement allowances (including retirement allowances, etc.) paid by the corporation to the officer shall not be included in deductible expenses.

2) In addition to regular wages, bonuses are money and valuables paid by an employer in lump sum to an employee in a quarterly or on a specific period, and there is a conflict of opinion as to whether the legal nature of bonuses is deemed wages as remuneration for work. However, workers’ bonus claims are at least premised on the existence of labor relations with the employer at least. On the other hand, in a case where an employee continues to provide labor for more than one year and retires, retirement allowances are accumulated without paying a part of wages for the employee’s provision of labor, and are paid as a lump sum when an employee retires, and both are clearly distinguishable.

3) We examine whether the issue amount falls under the bonus or the nature of retirement allowance. ① The Plaintiff’s meeting minutes of the board of directors (Evidence A 3) of December 23, 2005, which decided to pay the issue amount to △△△△△△△△, stated that “the Plaintiff’s performance of active roles in changing corporate management and surrounding circumstances by fulfilling his/her responsibility as the former representative director,” and that “the payment should be made pursuant to our executives’ remuneration regulations, such as outstanding business performance during the period of his/her retirement and retirement.” The provisions on the payment of incentives for the instant agreement (Evidence A 10) also stipulate that “the retirement bonus” includes the key amount in the Plaintiff’s account (Evidence B 12) and the head of the △△△△△△△△△○’s employment contract, and it is difficult to view that the Plaintiff’s employment contract was written on the basis that the Plaintiff’s employment contract was written on the premise that it was difficult to actually carry out the work after the retirement of △△△△△△△△△△’s.

4) According to Article 44(3)1 of the Enforcement Decree of the Corporate Tax Act, where the amount to be paid as retirement benefits (including retirement benefits, etc.) is determined by the articles of incorporation among the retirement benefits paid by the corporation, the amount in excess of the amount stipulated in the articles of incorporation shall not be included in the calculation of losses. Meanwhile, Article 39(2) of the Plaintiff’s articles of incorporation provides that “the amount of retirement benefits paid by the director shall be included in the calculation of losses.” (Evidence 6 of the Plaintiff’s articles

Therefore, the instant disposition is lawful.

3. Conclusion

Therefore, the plaintiff's claim of this case is dismissed as it is without merit, and it is so decided as per Disposition.

Relevant statutes

Corporate Tax Act

Article 19 (Scope of Deductible Expenses)

(1) Deductible expenses shall be the amount of losses incurred by transactions which reduce the net assets of a corporation, excluding return of capital or financing, disposition of surplus funds, and what is provided for in this Act.

(2) The losses under the provisions of paragraph (1) shall be losses or expenses generated or spent in connection with the business of a corporation which are generally accepted as normal or directly related to profit, except as otherwise prescribed by this Act and other Acts and subordinate statutes.

(3) Matters necessary for the scope and types of losses under the provisions of paragraphs (1) and (2) shall be prescribed by Presidential Decree.

Article 20 (Non-Inclusion of Losses from Capital Transactions in Calculation of Losses)

Losses falling under any of the following subparagraphs shall not be included in the calculation of losses in calculating the income amount for each business year of a domestic corporation:

1. The amount appropriated as losses for the disposal of surplus funds: Provided, That this shall not apply to piece rates prescribed by Presidential Decree;

2.3. Omitted;

Enforcement Decree

Article 20 (Scope of Piece Rates, etc.)

(1) The term " piece rates prescribed by Presidential Decree" in subparagraph 1 of Article 20 of the Act means any of the following rates:

1. and 1. Deleted;

2. Piece rates paid by treasury stocks acquired under Article 189-2 of the Securities and Exchange Act through employee stock ownership association under Article 2 (18) of the same Act (hereinafter referred to as the "employee stock ownership association"). In this case, it shall include the amount paid as piece rates by the relevant corporation to the employee stock ownership association which acquired the stocks of the relevant corporation on the securities market under the Securities and Exchange Act and distributed

3. Amount paid under Article 15 (4) of the Restriction of Special Taxation Act.

4. Performance-based bonuses paid by a domestic corporation to workers (excluding executives pursuant to the provisions of Article 43 (6)) according to a written agreement concluded between such domestic corporation and its workers in advance with respect to the performance assessment indices and their goals, method of performance measurement and distribution; and

Article 43 (Non-Inclusion of Bonuses in Calculation of Losses)

(1) Bonuses paid by a corporation to officers or employees in the disposition of profits (excluding piece rates falling under the provisions of any subparagraph of Article 20 (1)) shall not be included in the calculation of losses. In this case, remuneration paid to members who invest through work and labor in unlimited partnerships or limited partnerships shall be deemed as bonuses from the disposition of profits.

(2) Where a corporation pays bonuses to executives in excess of the amount paid according to the standards for payment of benefits determined by the articles of incorporation, general meeting of shareholders, general meeting of partners or resolution of the board of directors, such excess amount shall not be included

(3), (4), (5) omitted.

(6) Officers under the provisions of paragraphs (1) through (5) (hereinafter referred to as “officer”) shall mean persons performing the duties under the provisions of each of the following subparagraphs:

1. All members of the board of directors, such as the chairperson, president, vice president, chief director, representative director, managing director, executive director, etc. and liquidator;

2. Executive partners or directors of unlimited partnerships, limited partnerships and limited companies;

3. Auditor.

4. Other persons performing duties similar to those under subparagraphs 1 through 3.

Article 44 (Non-Inclusion of Retirement Benefits in Calculation of Losses)

(1), (2) omitted

(3) The retirement benefits paid by a corporation to its officers in excess of the amount falling under any of the following subparagraphs shall not be included in the calculation of losses:

1. Where the amount to be paid as retirement benefits (including retirement consolation benefits, etc.) is determined by the articles of incorporation, an amount determined;

2. In cases other than those under subparagraph 1, the amount obtained by multiplying the amount equivalent to 1/10 of the total salary (referring to the amount under Article 20 (1) 1 (a) and (b) of the Income Tax Act, but excluding the amount not included in deductible expenses under Article 43) paid to the relevant executive for one year retroactively from the date of his retirement by the number of years of continuous service computed by the

(4) The provisions of paragraph (3) 1 shall include the cases where the articles of incorporation stipulate the standards for calculating the retirement benefits of executives, and where the articles of incorporation provide for the payment of the retirement benefits delegated to him, such provisions shall apply.